The EU's New AML Package: What Financial Institutions Need to Know for 2025

In 2025, financial institutions across Europe will face a significant shift in anti-money laundering (AML) regulations. The European Union (EU) has introduced a comprehensive AML package aimed at harmonizing and strengthening the fight against money laundering and terrorist financing (CFT). 

This package includes the establishment of a new regulatory authority—the Anti-Money Laundering Authority (AMLA)—and introduces stricter compliance measures, particularly for high-risk financial institutions.

According to the European Commission, around 1% of the EU’s annual GDP is involved in suspicious financial activity, underscoring the urgent need for more robust measures. With the EU’s new AML package set to take full effect by mid-2025, financial institutions must prepare now to avoid penalties and ensure compliance.

Key Components of the EU’s New AML Package

The EU’s new AML package represents a significant overhaul of existing regulations. It introduces new rules that will affect how financial institutions handle customer due diligence, beneficial ownership disclosures, and cross-border operations.

1. Establishment of the Anti-Money Laundering Authority (AMLA)

One of the most notable changes is the creation of the AMLA. This new authority will be based in Frankfurt and will have direct supervisory powers over selected high-risk financial institutions operating across multiple member states. The AMLA aims to ensure uniform application of AML rules across the EU by:

• Directly supervising "selected obliged entities" that are considered high-risk or operate in at least six member states.
• Imposing sanctions on entities that fail to comply with AML regulations.
• Coordinating with national regulators to improve information sharing and enforcement actions.

The AMLA is expected to be fully operational by late 2025, but its selection process for "selected obliged entities" will begin in 2027, with direct supervision starting in 2028.

2. Harmonized Customer Due Diligence (CDD) Rules

The new package introduces more stringent customer due diligence requirements across all member states. These include:

• Enhanced due diligence measures applying for high-risk transactions and customers.
• Simplified due diligence for low-risk situations, but with clearer guidelines on when this can be applied.
• A harmonized approach to identifying beneficial owners, including stricter disclosure requirements for non-EU entities linked to the EU.

The aim is to close loopholes that allow inconsistent application of CDD rules across different jurisdictions.

3. Expanded Scope of Obliged Entities

The list of entities subject to AML regulations has been expanded under the new package. In addition to traditional financial institutions like banks and insurance companies, the following sectors are now included:

• Crypto-asset service providers (CASPs), which are treated as financial institutions under these rules.
• Crowdfunding platforms not covered by existing regulations.
• Mortgage lenders and consumer credit intermediaries.

This expansion reflects growing concerns about money laundering risks in emerging sectors like crypto-assets and non-traditional financial services.

4. Beneficial Ownership Transparency

The EU’s new framework places a strong emphasis on transparency regarding beneficial ownership. Key provisions include:

• A harmonized approach across member states for identifying and disclosing beneficial owners.
• Powers granted to beneficial ownership registers to verify information provided by companies.
• Stricter disclosure requirements for nominees and non-EU entities with ties to the EU.

These measures aim to prevent criminals from hiding behind complex corporate structures or anonymous shell companies.

5. Cash Transaction Limits

To mitigate money laundering risks associated with large cash transactions, the European Union has introduced a uniform cap of €10,000 for cash payments across all member states. This measure is part of the broader Anti-Money Laundering (AML) package aimed at enhancing financial transparency and combating illicit financial activities. 

The €10,000 limit applies to both financial institutions and businesses dealing in high-value goods, including art dealers, real estate agents, and luxury car dealerships. Notably, individual member states retain the discretion to impose lower thresholds based on their specific risk assessments and national contexts. For instance, Germany has implemented stricter measures, requiring identification and proof of funds' origin for cash transactions exceeding €10,000.

6. Centralized Bank Account Registers

A key reform within the EU's AML framework is the establishment of centralized bank account registers in each member state. These registers will compile comprehensive information on account holders and the locations of their bank accounts. The primary objective is to enhance transparency and facilitate the detection and investigation of suspicious financial activities. 

Access to these registers will be granted to national Financial Intelligence Units (FIUs) and other competent authorities, thereby streamlining the process of tracing illicit financial flows. Additionally, the EU plans to interconnect these national registers through a single access point, enabling cross-border cooperation and information sharing among member states.

7. Enhanced Due Diligence Measures

Under the new regulations, financial institutions are required to implement Enhanced Due Diligence (EDD) measures, particularly when dealing with transactions involving high-risk third countries or high-net-worth individuals. EDD entails more rigorous verification processes, including:

• Comprehensive Customer Identification: Verifying the identity of customers and beneficial owners through reliable and independent sources.
• In-depth Risk Assessment: Evaluating the purpose and intended nature of the business relationship to identify potential risks.
• Ongoing Monitoring: Continuously scrutinizing transactions to ensure they are consistent with the customer's profile and business activities.

These measures are designed to detect and prevent illicit activities by ensuring that financial institutions have a thorough understanding of their customers and the nature of their transactions. The implementation of EDD is particularly essential in scenarios where the risk of money laundering or terrorist financing is elevated.

Implications for Financial Institutions: What You Must Do

Financial institutions within the EU must undertake several actions to comply with the EU’s new AML package:

• Review and Update Compliance Programs: Institutions should assess and revise their AML/CFT policies and procedures to align with the new regulations, ensuring all aspects of the single rulebook are incorporated.
• Enhance Customer Due Diligence Processes: Implement more stringent customer verification and monitoring systems, particularly for high-risk clients and transactions, in accordance with the enhanced due diligence requirements.
• Integrate with Centralized Registers: Establish protocols for accessing and reporting to centralized bank account registers, facilitating cooperation with FIUs and law enforcement agencies.
• Train Staff on New Obligations: Conduct comprehensive training programs to educate employees about the expanded scope of obliged entities, new reporting requirements, and the implications of the AMLA's supervisory role.
• Monitor Cash Transactions: Implement systems to detect and report cash transactions exceeding the €10,000 threshold, ensuring compliance with the new cash payment limitations.

How Lucinity Can Help You Stay Compliant

With the EU's 2025 AML package bringing substantial regulatory updates, Lucinity provides financial institutions with an advanced platform that simplifies compliance while enhancing operational efficiency. By leveraging powerful AI tools, Lucinity equips compliance teams to tackle new requirements with confidence and agility.

AI-Powered Transaction Monitoring and Suspicious Activity Detection

Lucinity’s platform offers scenario-based transaction monitoring, powered by customizable rules, which integrates with partner-led real-time monitoring and sanctions screening tools. Through partnerships with Resistant AI, Sift, and Neterium, Lucinity enables accurate detection of suspicious activity, focusing efforts on real threats and reducing false positives. This comprehensive approach aligns perfectly with the new package’s requirements for enhanced scrutiny and proactive risk management.

Luci Copilot: Streamlined Case Management and Decision-Making

The Luci Copilot, Lucinity’s generative AI-powered assistant, accelerates case investigations and due diligence processes. Luci summarizes complex case information, flags high-risk indicators, and offers money flow visualizations, making it an invaluable tool under the new AMLA supervision. By consolidating all pertinent data into an intuitive case manager, Luci enhances clarity and simplifies compliance procedures, cutting average case review times by up to 80%.

Customer 360° Intelligence for Enhanced Due Diligence

With the AML package’s stricter requirements for customer due diligence, Lucinity’s Customer 360° provides an all-encompassing profile of each customer, integrating KYC data, transactional histories, and external data sources. This dynamic profiling aids institutions in meeting the new harmonized due diligence standards while continuously updating risk scores, which enhances both proactive monitoring and regulatory compliance.

Automated Compliance Reporting and SAR Generation

Lucinity's platform automates the preparation and filing of Suspicious Activity Reports (SARs) in line with regulatory deadlines, ensuring accuracy and consistency. Luci’s AI-driven capabilities streamline SAR generation and regulatory reporting, reducing the time needed for documentation from hours to minutes. This automation not only supports adherence to reporting obligations under the new AML framework but also frees up compliance resources for higher-priority tasks.

Luci Studio for Customizable Workflows

For institutions facing a complex regulatory environment, Luci Studio offers no-code, customizable workflow capabilities. Compliance teams can build workflows tailored to specific regulatory requirements or internal protocols, adapting to changes without technical intervention. With Luci Studio, financial institutions can adjust their monitoring and reporting processes in real-time, ensuring that all aspects of compliance remain up-to-date and efficient.

System-Agnostic Integration and Cost Efficiency

Lucinity’s Luci Copilot plug-in integrates seamlessly into any web-based enterprise system, offering immediate value without extensive overhaul costs. This plug-in is particularly valuable for institutions that need to enhance their compliance systems in response to the EU’s AML package but want to avoid the time and expense of a full system replacement. With Luci’s tools, institutions can deploy advanced compliance solutions quickly, achieving up to 90% productivity gains and a faster ROI.

Summary

The EU’s new AML package represents a major shift in how financial institutions must approach anti-money laundering compliance. With stricter customer due diligence rules, expanded scope for obliged entities, and a powerful new regulatory authority in place, preparation is key for staying compliant come 2025. 

Takeaways:

1. AMLA Supervision: The newly established AMLA will directly supervise high-risk financial institutions operating across multiple member states.
2. Expanded Obliged Entities: Crypto-asset service providers, crowdfunding platforms, mortgage lenders, and others are now subject to AML regulations.
3. Harmonized CDD Rules: Stricter customer due diligence requirements aim to close loopholes in cross-border transactions.
4. Beneficial Ownership Transparency: New rules require more detailed disclosures about beneficial owners, particularly for non-EU entities linked to the EU.

For more information on how Lucinity can assist your organization in meeting these challenges, visit Lucinity.

FAQs

What is the purpose of the new EU AML package?

The new EU AML package aims to harmonize anti-money laundering rules across member states while introducing stricter compliance measures for high-risk sectors.

Who will be supervised by the new Anti-Money Laundering Authority (AMLA)?

AMLA will directly supervise selected high-risk financial institutions operating across multiple member states starting in 2028.

What are obliged entities under the new AML package?

Obliged entities include traditional financial institutions like banks as well as newer sectors such as crypto-asset service providers and crowdfunding platforms.

What is the cash transaction limit under the new EU rules?

The maximum allowable cash payment under the new rules is capped at €10,000 across all member states.